ASIC files lawsuit against ex, current The Star employees in Australia

The independent commission tasked with regulating registered companies, financial markets and financial services in Australia, the Australian Securities and Investments Commission (ASIC), announced Tuesday it filed a lawsuit against current and former directors and officers at The Star Entertainment Group.

Filed with the Federal Court, the civil penalty proceedings allege 11 current and former officers, as well as directors of the company, breached their duties under section 180 of the Corporations Act. Not unexpectedly, the lawsuit is related to The Star's ties with its overseas customer, Suncity, a company that operated as a junket.

Upon launching its investigation, ASIC collaborated with the NSW and Queensland gambling regulators, as well as AUSTRAC, the body responsible for preventing and detecting financial crimes. ASIC claimed that Suncity was The Star's biggest junket which brought in turnover of "approximately $2.1 billion, $4 billion and $5.9 billion for the 2017, 2018 and 2019 financial years respectively," a statement released by the Commission reveals.

With the lawsuit, ASIC alleges that multiple members of the senior management team at The Star, as well as officers breached their duties. Such breaches, if proven, under the Corporations Act, are subject to a maximum penalty of AU$1,050,000 ($720,000) for each breach within the period of 2017 and 2019, ASIC explained.

Sarah Court, ASIC's Deputy Chair, explained that the lawsuit alleges "that Star's board and executives failed to give sufficient focus to the risk of money laundering and criminal associations, which are inherent in the operation of a large casino with an international customer base."

Joe Longo, ASIC's Chair, added that both officers and directors play significantly important roles for businesses in Australia. "Their duty is to understand the operations of the company over which they preside, and the particular risks faced by the business," he added.

The lawsuit alleges that the breaches occurred between 2017 and 2019 and involve The Star's former Chair, John O Neill, the company's ex-CEO and Managing Director, Matthias Bekier, as well as other members that held senior-level roles such as Richard Sheppard, Kathleen Lahey, Gerard Bradley, Benjamin Heap, Zlatko Todorcevski and Sally Pitkin.

According to the legal claim, allegedly, The Star's Board members gave the green light about a business relationship with "certain individuals with reported criminal links, rather than addressing money laundering risk by inquiring into whether Star should be dealing with them," ASIC said.

Additionally, the lawsuit alleges that Board members did not take relevant action when they received information regarding the risks of money laundering. The members of the Board also did not encourage or take action for further investigation into the possible risks and breach of obligations, the civil penalty claims.

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